today’s outline
• market segmentation
• market targeting
• differentiation
• positioning
• create value for target customers
session 06
segmentation | targeting
differentiation | positioning
EB204 introduction to
international marketing
Dr Adam Johns
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market segmentation
Dividing a market into smaller
segments with distinct needs,
characteristics, or behavior that
might require separate marketing
strategies or mixes.
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why segment markets?
•variation in customer needs is the primary motive for market
segmentation.
•most companies will identify and target the most attractive market
segments that they can effectively serve.
•in global marketing, market segmentation becomes especially
critical because of wide divergence in cross-border consumer
needs and lifestyles.
Geographic
segmentation
Demographic
segmentation
Psychographic
segmentation
Behavioral
segmentation
•Once the management has chosen its target segments,
management needs to determine a competitive positioning strategy
for its products.
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bases for segmentation: geographic
bases for segmentation: demographic
• geographic segmentation divides the market into different
geographical units such as nations, regions, states, counties, or cities
• demographic segmentation divides the market into groups based on
identifiable and measurable variables (differences) in human populations
• world region (North America) or country (India)
• age, gender, generation,
• country region (Pacific Northwest; Kanto)
• family size, family life cycle,
• size (population)
• income
• population density
• occupation, education,
• climate
• religion, race, nationality
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HARLEY DAVIDSON - not likely to use pink.... on their bikes
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COSMETICS AND SKIN CARE companies targeting men
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spot the difference?
Ritz-Carlton: Love at
Lake Las Vegas
2 nights for... $100,000
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bases for segmentation: psychographic
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psychographic segmentation involves grouping people in terms
of their social class, attitudes, personality traits, values, and
lifestyles
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innovators
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thinkers |
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strivers | experiencers | makers |
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survivors 14
bases for segmentation: psychographic
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eg Porsche in North America found their buyers could be broken
down more than age, income and education
! “Top Guns” (27%) ambitious and care about image and being
noticed
believers
! “Elitists” (24%) old-money blue-bloods. “Just a car”. Money is no
object
| achievers |
! “Proud Patrons” (23%) ownership as a trophy for hard work
! “Bon Vivants” (17%) jet-setters and thrill seekers
(VALS types - www.strategicbusinessinsights.com/vals/)
! “Fantasists” (9%) car is an escape - avoid impressing others
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bases for segmentation: behavioural
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focuses on whether or not people buy and use a product, and how
much or often they consume it.
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usage rates (heavy, medium, light) 80/20 rule
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users status (potential user, first-time user, non-user, regulars)
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segments need to be...
• Identifiable
• Stable
- can they be found and measured,
and differentiated from other
segments
- is there data to suggest long-term
trend rather than fad?
• Responsive
• Sizable
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purchase occasion (gift? regular use? special occasion?)
- are they large enough to warrant
separate classification and targeting?
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loyalty status (how likely are users to purchase competitor’s
products?)
• Accessible
- how are they likely to respond to
changes in the marketing mix?
• Actionable
- can they be reached through
distribution and promotion channels?
•see the Gruen Transfer when it comes to market segments for underwear
- are changes required to marketing
mix consistent with company’s core
competencies?
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market targeting
sizeable? accessible?
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evaluating target
market
• Segment size and growth
selecting target
market
• Segment structural
attractiveness
• Company objectives and
resources
target market consists of a set of
buyers who share common
needs or characteristics that the
company decides to serve...
...based on a significant potential
to respond
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undifferentiated
targeting
• Undifferentiated marketing or
mass marketing targets the
whole market with one offer
• Focuses on common needs
rather than what’s different
differentiated
marketing
• Differentiated marketing
targets several different market
segments and designs separate
offers for each
• Goal is to achieve higher sales
and stronger position
• More expensive than
undifferentiated marketing
MARKETING MIX 1
Segment 1
MARKETING MIX 2
Segment 2
MARKETING MIX 3
Segment 3
MARKETING MIX 4
Segment 4
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concentrated
marketing
• Concentrated marketing or
niche marketing targets a
small share of a large market
• Limited company resources
MARKETING MIX
Segment 1
• Knowledge of the market
• More effective and efficient
• but comes with risks...
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choosing a target
market
micro-marketing
• micromarketing is the practice
of tailoring products and
marketing programs to suit the
tastes of specific individuals
and locations
Depends on:
• Company resources
• Product variability
• Local marketing involves...
• Product life-cycle stage
• Market variability
• Individual marketing involves...
• Competitor’s marketing
strategies
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positioning products
• Product position is the way
the product is defined by
consumers on important
attributes—the place the
product occupies in
consumers’ minds relative to
competing products
positioning
• Perceptions
• Impressions
• Feelings
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bases for differentiation
choosing differentiation and positioning strategy
• Identifying a set of possible competitive advantages to build a
position
• Choosing the right competitive advantages
• Selecting an overall positioning strategy
PRODUCT
DISTRIBUTION
• Communicating and delivering the chosen position to the market
• Competitive advantage is an advantage over competitors gained
by offering consumers greater value, either through lower prices or
by providing more benefits that justify higher prices
SERVICES
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PEOPLE
IMAGE
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value proposition
IMPORTANT
DISTINCTIVE
SUPERIOR
COMMUNICABLE
PREEMPTIVE
AFFORDABLE
PROFITABLE
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final thoughts
• value proposition is not just about “more” or “less”
• it is about how the product is differentiated and what value that
difference adds to consumers
next week: midterm exam!
• firms need to be able to deliver on their positioning and value
proposition not only to be judged as ‘good value’ but also to be
perceived as ‘authentic’
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